A Significant Merger Gets CCI Approval
On September 1, the Competition Commission of India (CCI) granted approval for the merger of Tata Group’s Vistara and Air India under certain conditions. This approval paves the way for Oil India to potentially become the country’s largest international airline, while ranking as the second-largest airline for domestic flights, with Indigo in the top spot.
Key Details of the Merger
The CCI’s notification stated that it has approved the merger of Tata SIA Airlines with Air India and the acquisition of specific shareholdings in Air India by Singapore Airlines (SIA). Under this proposal, Tata SIA Airlines Limited (TSAL/Vistara) will merge with Air India Limited.
Tata Group has indicated that they will provide detailed information about the merger at a later date. Prior to this approval, in June, CCI had issued a show cause notice to Air India, seeking clarification on why the proposed merger with Vistara should not be investigated for competition-related concerns.
Strengthening Tata Group’s Aviation Business
This move by Tata Group represents a significant step in strengthening their presence in the aviation sector. Both Vistara and Air India are part of the Tata Group, with Singapore Airlines (SIA) holding a 49 percent stake in Vistara. As part of the merger, SIA will invest Rs 2,059 crore in Air India, acquiring a 25.1 percent stake. Afterward, Tata Sons will hold a 74.9 percent stake in the airline.
It’s worth noting that Tata Sons and SIA submitted a merger application to the CCI in April, asserting that the proposed merger of Vistara with Air India would not negatively impact competition. The merger deal is expected to be finalized by March 2024.
Growth Prospects
CAPA India anticipates that following the merger, Air India will witness significant growth over the next six years, accompanied by notable enhancements in quality and the global network. In the future, Tata Airlines may acquire a 50 percent stake on a global scale.
